Debenhams is a High Street delight

DEBENHAMS is one of the few High Street chains still growing sales, said chief executive Rob Templeman, who is gearing up to announce a sharp jump in annual profits.

Sales at the department store group are 'pretty good,' though Templeman admits the consumer downturn has taken its toll.

'Life has got tougher, but we will demonstrate positive like-for-like sales growth,' he says. 'We are very pleased. Anyone in positive territory is doing well.'

Templeman has made a fortune for himself and backers from previous purchases of Halfords and Homebase. Halfords was floated on the stock market and Homebase sold to GUS. Debenhams is tipped to return to the stock market early next year, but Templeman remains coy. 'We have no definitive plans for an IPO at the moment.'

However, he is not ruling it out. 'The IPO market is very strong at the moment. It has not been tested for a retailer yet, but if you have a good business case you are usually okay,' he adds.

Templeman took Debenhams private for £1.7bn in December 2003 in a deal backed by CVC, Texas Pacific and Merrill Lynch.

'Eighteen months ago everyone was saying we had massively overpaid,' he said. Yet his backers, who invested £600m, have already taken out £1.2bn in cash. The chain is valued at around £3bn, including debt, and investors are 'in no rush' to sell out.

Templeman says there is a lot more growth to come. He sees scope to open up to 150 minidepartment stores. He declares: 'One of the misnomers about private equity is that everyone thinks you are an asset-stripper. We have doubled the capex [capital spending] to £128m. The only way you can exit these businesses is to have a growth story.'

Sales of the Designers at Debenhams clothes range have doubled to £400m since the takeover, thanks to better displays. Templeman has also cut store-opening costs by 40%, compared to when the company was public. Tomorrow, a seven-month makeover at Debenhams' flagship Oxford Street store is completed at a cost of £8m, compared to initial estimates of £32m.

He expects payback on the revamp 'within a year' and sales to grow 20%-25%, helped by an extra floor of space. Fixture costs are down by 20%, helped by sourcing from China, and 'layers of bureaucracy' have been cut.

Templeman's backers are very happy, and he reckons he will not have any trouble raising cash for any future deals. For now, he insists, he is totally focused on Debenhams. 'Out of all of the jobs I've had, this is probably the one I enjoy the most.'